After months of negotiations and market uncertainty, BHP has finally locked in a major iron ore supply agreement with the China Mineral Resources Group (CMRG).
The deal secures a crucial pathway into its biggest export market with CMRG who represents 80 per cent of China’s steel mills.
Prolonged discussions didn’t seem to affect BHP, with it’s realised iron ore prices increasing by 2 per cent to $84.91 per wet metric tonnes (wmt) in the March quarter, supported by a strategic shift in product mix towards higher-value ores from Mining Area C and increased lump sales.
“We have concluded iron ore sales contract negotiations with the China Mineral Resources Group,” BHP said.
While the deal takes centre stage, it coincides with strong operational performance in Western Australia. BHP’s Western Australia Iron Ore (WAIO) operations produced a record 191 million tonnes (Mt) for the nine months to March.
Output was underpinned by record material mined, improved rail efficiencies and stronger port performance, including gains from the Car Dumper 3 rebuild and optimisation of the rail network.
The agreement with CMRG reinforces the importance of iron ore to BHP’s portfolio, particularly as the division continues to fund growth across various commodities.